Disruptive and cloudy conditions ahead

CIOs need to reimagine IT through creative destruction, which enables them to build a new IT department with the ability to allocate and position the team in more strategic areas of the organisation, says Michele Caminos, VP of research at Gartner.
“Identify where your IT initiatives are and where they are being focused — on the competitive advantage practices of the organisation or in the back office?” suggests Caminos.

In its study ‘Reimagining IT: The 2011 CIO Agenda’, Gartner asked 2014 CIOs around the world how unique their organisation’s business strategies are. Sixty-five percent of respondents said that they are general or generic in nature. Are the IT initiatives within the IT department the most strategic in nature for the business, asks Caminos.

“This is where there becomes a gap between the IT department’s view of how strategic you are to the business, and the business’s view of how strategic IT is to them. If you are simply applying the majority of your investment to general or generic practices of the organisation — where is the value?”

Caminos was one of the speakers at this year’s MIS100 launch in Auckland, which featured the results of the annual profiling of the top ICT users in New Zealand.

Creative destruction

The Gartner research found that the IT department is going to go through ‘creative destruction’ — originally a Marxist economic term that secured a more modern adaption from Austrian-American economist Joseph Schumpeter in the 1940s. He defined creative destruction as a process of change where you dismantle and then reallocate your resources, says Caminos.

Forty-three percent of respondents estimate to have 50 percent or more of their infrastructure in the cloud and 50 percent or more of the applications delivered via SaaS in the timeframe 2011 to 2015.

“Over the next four years, we are going to see dramatic change in the IT department,” says Caminos. “That is what we call creative destruction.”

Traditionally, the majority of IT investment has gone into supporting the operation of the business, in areas such as recruitment; budget and financial management, says Caminos.

“These areas, I would argue, are generic and general in practise,” she says.

Where CIOs need to be focusing their time is around market-testing new products and services; managing customer relationships; identifying customer needs; identifying new sales prospects and managing supplier performance,” says Caminos.

There are two key areas, she says businesses need to focus on — benefits realisation and managing the skill gap.

A comment from the floor was that a CIO’s scope and ability to work at a more strategic level depends on the maturity of the executive team. Caminos agreed this is a challenge, saying she has seen many sophisticated IT departments that want to move forward and are held back by the executive team.

Disaster recovery at Beca

Robin Johansen, CIO of The Beca Group, talked about the theory and reality of disaster recovery in his presentation. Beca’s Brisbane office with 22 staff got completely flooded when the Queensland flood hit. The good thing about a flood is that you can generally see it coming, says Johansen, so the company had a couple of days to prepare for the evacuation of the office.

“All you have to do is tell people what they need to do,” says Johansen. “But who said they would follow instructions?”

Staff were asked to take their laptops with them when they left the office, but most laptops were left behind. However, Johansen’s team sourced other laptops from the Melbourne office and got these to Brisbane. The next step was moving into a temporary office space in a hotel.

Telephony was a significant challenge, Johansen says. In the hotel, the team had a single landline, so they were reliant on mobile. But the mobile networks were overloaded and there were pleas from the community to stay off the networks if possible.

“First of all, we were extraordinarily lucky,” says Johansen of the Christchurch event. “None of our people, or our people’s families, were injured. So we started from a better place compared to many.”

Disaster recovery after the first earthquake went relatively well, he says. Data communications stayed up and the UPS kicked in and kept things going. Johansen’s team established an extranet that turned out to be very helpful.

“It worked extremely well. The number of hits we got on that extranet dazzled me. People were using it to communicate with each other, in terms of business, and it quickly became a means to provide service to our clients.”

What tripped Beca up was a simple thing — phone numbers. Many managers found that they didn’t have the phone numbers of their staff and couldn’t contact them. The reason for this was that phone lists were out of date, or staff had chosen not to update their personal details in the HR system, says Johansen.

It was clear at an early stage that the February earthquake was much more serious, says Johansen. The extranet was up again quickly, but there was “more mobile phone chaos”, he says. Beca was located in the red zone in Christchurch, so once everyone was out there was no going back into the building. Beca lost access to most computers, but the team always keeps some spare computers, just in case. The Auckland staff also stepped up by giving their laptops up to staff in Christchurch.

“Our strategy of hanging on to old servers after they’ve been decommissioned really paid off. We sit them quietly in a corner in the expectation that we might need them one day. And this was the day.”

“Another thing that paid off for us: We run constant SAN replication so we had all the data,” he says. “All we had to do was change the DFS [distributed file system] links and people had their data back.”

The human factors

Beca had the view that if there were a disaster, people would be able to work from home. But what came as a surprise was that even though staff had computers and internet access at home, they didn’t want to work alone. There was a need to get together to share the experience, support each other and work with clients, says Johansen.

Coffee machines are now part of the company’s business continuity plan, Johansen says. “After a couple of weeks, people really needed that coffee!”

Printers also turned out to be in hot demand. Beca had to go from one office to seven, spread across Christchurch, and this created a printer shortfall.

“We didn’t have lots of spare printers. That wasn’t part of the plan either. So we had to do some pretty creative things with a bunch of ordinary printers.”

Time for CIOs to step up

Johansen finished off his presentation with a topic he confesses he is passionate about — IT governance. According to numbers from an IBM study from 2010 — the Biennial IBM Global CEO study — complexity is the biggest challenge confronting CEOs, he says. Less than half of the 1500 respondents felt prepared to handle the complexity. In Australia and New Zealand, 84 percent of CEOs expected the level of complexity to grow significantly, but only 39 percent believed that they knew how to deal with it successfully.

“CEOs are overwhelmed by data whilst still being short of insight,” he says. “Isn’t that where we, through business intelligence, can bring things down to a level that CEOs and other senior executives can act on?”

Johansen asked the members of the audience to raise their hand if they were a director of their company. Only five people in the room raised their hands.

“Have we become marginalised, with a focus on operational rather than strategic and innovation initiatives?” asks Johansen. “Yes, we have. We are not influencing the way the business can grow, using IT as an enabler.”

He also posed the question why CIOs are under-represented in meeting these challenges, when IT professionals are known to thrive in rapidly changing environments.

“We are good at change. We change constantly and we know how to adapt. By nature that is the sort of people we are and yet we are not on the front line at a governance level, helping the business.”

Only about 10 percent of the members of the Institute of Directors in New Zealand have computing experience and skills he claims.

“A very small percentage of the director community have IT skills. That’s a failing on our part. Why aren’t we stepping up as directors?”

CIOs can take away some of that complexity, he says. They can do the enablement and bring the innovation.

“We, as a group of professionals, are not fulfilling a role that is needed in the community. We can step up,” he says. “We’ve got the capability and the world needs us.”

HealthAlliance tops MIS100

HealthAlliance, the shared service formed by the Northern district health boards for their non-clinical services, is New Zealand’s top IT user organisation in this year’s MIS100. The organisation has 252 IT staff and 18,328 screens in total.

The challenges the organisation faces correlates with what was discussed during the event, says healthAlliance CIO, Johan Vendrig. Doing more with less is really the generic trend and that’s no different in health care, he says.

“At the same time, IT in healthcare is very much defined as a growth business,” he says. “More mobility, increasing complexity and, in particular, sharing information between healthcare providers, are still key themes that we are struggling with.”

The biggest challenge for Vendrig is creating this merged group at minimal, if any, change cost.

“My change budget is a negative number,” he said, drawing laughter from the crowd.

To keep costs down the merger is run solely by internal staff. “No paid consultants,” he says.

HealthAlliance now provides services to more than 26,000 users across the four Northern Region DHBs.

Maturing cloud

Paul Muckleston, country manager of Microsoft New Zealand, talked about the development of the computing cloud.

“We are now moving into a phase where cloud is better understood and more consistent,” he says.

Organisations like Microsoft, which runs 570 million Hotmail accounts as well as X-box Live with 30 million paid subscribers, have to figure out ways to innovate in self-service, power management and automation.

“Because if we don’t do that we can’t run these massive, scalable cloud services and make any margin on it,” he says.

The traditional providers, such as Oracle, IBM and SAP, come from a different perspective. They often build one-off, customised solutions for larger organisations, designed perfectly to the customer’s needs.

However, these two models are starting to meet in the private and hybrid cloud, says Muckleston.

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